Dollar Skids to Four-Month Low as Trump Trade Deflates

NEW YORK (Reuters) - The dollar fell to its lowest since November against a basket of currencies on Monday as investors lost confidence in prospects for a U.S. fiscal spending boost under President Donald Trump after his failure to pass a major healthcare reform bill.

Trump's inability to deliver on his campaign pledge to overhaul the nation's healthcare system marked a big setback for a Republican president whose own party controls Congress, and raised doubts over whether he will be able to see through tax reforms and a proposed spike in spending.

The dollar was down 0.65 percent on the day against the basket of major currencies used to measure its broader strength <.DXY>. It fell as low as 98.858, the lowest since Nov. 11.

"The assumption was that if you can’t get healthcare done that some of the other things on his agenda, mainly the tax reform, would be a harder sell," said John Doyle, director of markets at Tempus Inc in Washington.

The reduced expectations for Trump's reflationary tax and spending proposals also sent equities lower, with the U.S. S&P 500 <.SPX> down 0.75 percent.

The dollar index had risen to a 14-year high near 104.00 in early January when expectations for inflation-boosting stimulus under the Trump presidency were at their peak, with investors betting big on the so-called "Trumpflation" trade.

Speculators increased bullish bets on the U.S. dollar in the week up to last Tuesday for the third time on the trot, pushing net longs to their highest since Jan. 31, Commodity Futures Trading Commission (CFTC) data showed on Friday. [IMM/FX]

Against the yen <JPY=>, the dollar fell more than one percent to 110.09, its weakest since Nov. 18. The dollar hit its lowest against the Swiss franc, another traditional safe haven for capital, since Nov. 9. <CHF=>

The euro <EUR=EBS> reached $1.0904, its highest since Nov. 11. Sterling, the worst performer among the G10 group of major currencies against the dollar this year, hit an 8-week high of $1.2615 <GBP=D4>.

"The British pound is still close to its weakest level in 30 years, so it has some upside especially since data out of the U.K. has been better," Doyle said. "The Japanese yen has had a great run because stocks around the globe are down. So if you start breaking it down into each individual currency there’s a good reason, but overall it’s just a dollar negative day."

Creation of a Reader nation

A Reader Magazine Story

ABOUT US

From humble origins, Noble Media has grown its flagship media channel, The Reader, a newsmagazine in print and digital form, into one of the largest circulation free news magazines in California, mailed in print quarterly to 390,000 Californians. Since 2001, The Reader has provided a vital source of news and information to Riverside and San Bernardino counties from its headquarters in Redlands, California.

Noble Media is a California benefit corporation, and proudly one of 2,200 companies globally to earn the designation B-Certified, for meeting rigorous standards of social and environmental performance, accountability, and transparency.

THE STORY OF THE READER

About The Reader

Each quarterly, printed Reader Magazine is mailed to 390,000 people (120,000 households), and contains the best writing on a topic of major importance contributed by the world’s foremost thinkers, authors and experts as well as the perspectives of local community members.

The Reader Magazine provides information free— print and digital— according to a unique zone and sub-zone geographic structure. A zone is comprised of 120,000 households divided into four sub-zones of 30,000 households. Each 30,000 household-community receives its own, distinct Reader Magazine, with content produced especially for it. This empowers businesses to target in a hyper-local way, in what is often the only local media channel that physically reaches everyone in the community.